Headlight News Weekly for December 18, 2000 Page 2

December 18, 2000

JOINT REPORT BLAMES TIRES, NOT EXPLORER Firestone and Ford Motor Company are in the final stages of preparing a report for National Highway Traffic Safety Administration (NHTSA) investigators. According to USA Today, the report will likely focus on manufacturing problems dealing with an adhesive that bonds layers of the tire together. Firestone says that it redesigned the area where the layers bond together, called the wedge area, on newer tires made from 1998. Bridgestone Corporation, the Japanese parent company of U.S. division Bridgestone Firestone, now says that its profit estimates will be down by about 80 percent, due to a $750 million special loss from the costs of the Firestone tire recall. Worldwide, the U.S. market forms about 30 percent of Bridgestone's revenue. Bridgestone's 2000 net profit will fall to about $116 million, from an estimated $600 million just before the recall. In a related statement, Bridgestone president Yoichiro Kaizaki said that the company will conclude that fatal accidents attributed to Firestone tires were caused by a number of factors, and not just the tires as the report might suggest.

SUBARU RECALLS LEGACY Subaru of America has announced a voluntary recall of some 2001 Subaru Legacy models, including the Outback, for potential problems with a leaky fuel hose or a defective front bearing housing. Subaru says that the fuel hose problem affects 1456 vehicles, while the front bearing problem may affect up to 1977 vehicles. Owners of affected cars will be notified by mail.

EPA TO PHASE IN CLEAN DIESEL The U.S. Environmental Protection Agency (EPA) is nearing an agreement on new clean diesel requirements that would greatly cut pollution from trucks and buses. The new regulations would reduce the allowed sulfur content in fuel by 95 percent, to 15 parts per million (ppm). Since the regulations were proposed in May, which will require the new fuel to be phased in by 2006, oil refiners have protested that the new regulations will drive up the cost of diesel fuel and possibly create fuel shortages. Truck engine companies have sided with environmentalists, saying that the new fuels are needed to comply with upcoming 2007 emissions requirements. As a concession to refiners, the EPA is likely to adopt a phase-in timetable for the clean fuel.

ANOTHER FORD RECALL Ford Motor Company has announced yet another recall: this time, for a potentially defective top-speed limited on some 1999 and 2000 model year Ford Explorers and Mercury Mountaineers. The sport-utility vehicles, when equipped with the 15-inch tires and either a 3.27 or 3.55 rear axle ratio, may be able to exceed the 112-mph rating of the original-equipment Firestone tires. The problem was discovered during investigations of the recalled Firestone tires. Owners of the recalled vehicles will be asked to return their vehicles to dealerships to reprogram the powertrain control module. Ford says that 110,633 vehicles are affected.

DC RESTRUCTURING TO ENCOURAGE PLATFORM SHARING DaimlerChrysler AG is reportedly considering a full structural overhaul of the company that would split operations into four divisions to allow greater platform sharing. The company has also announced that it will have Chrysler and Mitsubishi cooperate on more future models in order to save money. Chrysler and Mitsubishi may increase the number of shared platforms, while the two would continue to share parts on some other models.

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